United Kingdom VAT & Duties Tribunals (Excise) Decisions

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Cite as: [2004] UKVAT(Excise) E00782, [2004] UKVAT(Excise) E782

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Singh v Customs and Excise [2004] UKVAT(Excise) E00782 (16 August 2004)

E00782

EXCISE DUTY — Restoration of seized excise goods and motor vehicle — Tribunal finds that the Appellant purchased the goods for use by family — the non restoration of the motor vehicle was disproportionate and caused exceptional hardship — Review Officer failed to apply the facts to the Respondents' policies on restoration and the 2002 Regulations — Review Officer wrongly restricted consideration of the restoration of the motor vehicle to the question of legal ownership — decision not to restore unreasonable — appeal allowed — further review ordered

MANCHESTER TRIBUNAL CENTRE

MR AVTAR SINGH Appellant

- and -

THE COMMISSIONERS OF CUSTOMS AND EXCISE Respondents

Tribunal: Michael Tildesley (Chairman)

Mohammed Farooq (Member)

Sitting in public in Birmingham on 22 June 2004

The Appellant appeared in person

Mr Ian Speed, of counsel, instructed by the Solicitor's Office of HM Customs and Excise, for the Respondents

DECISION

The Appellant is appealing against the decision on review of the Respondents dated 11 February 2004 not to restore excise goods (3,540 cigarettes, 617.10 litres of beer, 4.5 litres of wine and 37.5 litres of spirits) and a motor vehicle, Mercedes-Benz LCV Sprinter registration number FM 03 GFA.

The Appellant submitted a Notice of Appeal on 19 February 2004. The grounds for Appeal were as follows:

a) The goods were purchased for myself and family.

b) I don't believe the goods brought were excessive.

c) The total value of the goods was approximately £1,000 which is not divided between myself and family.

d) The vehicle was used for legitimate business, so should not have been seized.

e) This is the first occurrence.

The Issue

The function of the Tribunal is to determine whether the Respondents' decision not to restore the excise goods and motor vehicle was a decision which no reasonable body of Commissioners could have arrived at. In order for the decision to have been reasonable the decision maker must have considered all relevant matters and must not have taken into consideration irrelevant matters.

The Evidence

The Tribunal heard evidence from the Appellant. The Respondents served witness statements of Helen Belinda Perkins, the Review Officer, and Les Smith, an Officer for Customs and Excise upon the Appellant who raised no objections to their admission in evidence. A bundle of documents was provided to the Tribunal.

On the 26 November 2003 at Eastern Docks, Dover the Appellant was intercepted by the Respondents. At the time the Appellant was driving a motor vehicle, a Mercedes Sprinter van registered number FM 03 GFA. After interviewing the Appellant the Respondents seized 617.1 litres of beer, 3,540 cigarettes, 37.5 litres of spirits, and 4.5 litres of wine belonging to the Appellant. The Respondents also seized the motor vehicle.

The Respondents' Decision on Review dated 11 February 2004

The Review Officer, H B Perkins, took a fresh look at the circumstances of the case including the representations made by the Appellant. She noted that the Appellant had made delivery of clothing to Malaga and was expecting to have a delivery for the return journey. The Appellant's expectation was based upon an email which merely advised of the possibility of a return load. When the return load did not materialise the Appellant took one week to return to the UK. The Review Officer considered that these actions were not those of a prudent businessman who had just started up in business. A prudent businessman, in the Officer's view, would have had a formal contract for the return load and returned quickly to the UK to cultivate new orders. The Officer also noted the Appellant's response that "had the contract been fulfilled there would have had no reason to use the vehicle to full capacity on the return leg". The Officer concluded from the Appellant's actions and response that his principal reason for purchasing the excise goods was for business rather than social purposes.

The Review Officer then examined the Appellant's financial position. She noted that his father and brothers deposited £12,000 and £2,500 respectively in the Appellant's business' account to help him start his business. The Appellant had not provided the Respondents with any documentary evidence supporting his explanation about the deposit of £14,500. The Officer estimated that the Appellant must have paid a minimum of £1,000 on the excise gods and other items such as the play station and the mobile telephone. The Officer considered that the Appellant's unnecessary expenditure on excise goods would have a financial impact upon his business. The Officer concluded that the funding provided by his family was not solely for the Appellant's business but that his family had contributed financially to the purchase of the excise goods. The Review Officer believed that the Appellant's failure to produce a receipt for the cigarettes, and his memory lapse about where he bought them were strong indicators that they were purchased for an illegitimate purpose. The Review Officer also felt that the Appellant's reply of "you know what keep it I'm going" was an inappropriate response to the Customs Officer's reasonable questions about the makes/brands of cigarettes and alcohol and in her view further proof that the alcohol and cigarettes were not for own use.

The Review Officer then examined the Appellant's assertion that his business and livelihood depended upon the goods and the vehicle being returned to him. The Review Officer, however, concluded that the inconvenience and expense experienced by the Appellant as a result of the seizure of his goods and vehicle did not constitute exceptional hardship. The Review Officer for the reasons set outabove refused restoration of the excise goods. The restoration of the motor vehicle, however, was not a matter for the Appellant but a matter between the Respondents and Daimler Chrysler. The Appellant was not the legal owner of the vehicle. His company, Blue Logistics Ltd, had hired the vehicle from Daimler Chrysler under a three year lease.

The Review Officer recited in her review decision the Respondents' Restoration Policy for excise goods which was:

"It is this Department's general policy that seized excise goods should not normally be restored. However, each case is examined on its merits to determine whether or not restoration may exceptionally be offered".

The Respondents' Restoration Policy for Private Vehicles according to the Review Officer was:

" The Commissioners general policy regarding private vehicles used for improper importation or transportation of excise goods is that they will not be offered for restoration. The policy is designed to be robust in order to protect legitimate UK trade and revenue and prevent illicit trade in excise goods.

However, at the discretion of the Commissioners, vehicles may be offered for restoration or restoration on terms in the following circumstances:

Where the excise goods were destined for supply on a not for profit basis, for example, for reimbursement.

Where the excise goods were destined for supply for profit; providing the quantity of excise goods is small and it is a first occurrence.

Where the vehicle was owned by a third party owner who was not present at the time of seizure of the vehicle, and was either blameless or had taken reasonable steps to prevent smuggling in their vehicle.

In all cases any other relevant circumstances will be taken into account in deciding whether restoration is appropriate".

The Evidence of the Appellant

In October 2003 the Appellant decided to run his own business providing an international delivery service. His business traded under a private limited company, "Blue Logistics Ltd", which was registered at Companies House under the registration number 4936286. Previously the Appellant had been employed as HGV driver. On 10 November 2003 Blue Logistics Ltd hired a Mercedes-Benz Sprinter from Mertrux Limited under a 48 month operating lease agreement non-regulated which required the Company to pay a gross monthly rental of £423.76 in advance for the use of the vehicle.

His father who was a retired foundry worker gave the Appellant £10,000 to start his business which was paid into the Appellant's business account with HSBC on 11 September 2003. The bank statement also revealed a deposit of £2,500 on 10 September 2003, which the Appellant insisted in evidence was his money not his brothers.

In the interview with the Customs Officer the Appellant said that his father had given him the money to pay for the ferry ticket and fuel so he could make the drop. In his letter accompanying the Appeal notice he stated that members of his family had telephoned him to buy goods for which they would re-imburse him as Christmas was around the corner.

The Appellant received his first order from Sunjeet Sanghera regarding a delivery of 41 boxes of clothing from Leicester to Malaga in Spain. He was required to pick up the consignments from three Leicester factories on the 17 November 2003 and deliver them to Pura Moda SL near Malaga Airport by no later than the morning of 20 November 2003. The arrangements were confirmed in a series of emails between Sunjeet Sanghera and the Appellant. In an email dated 11 November 2003 Mr Sanghera stated:

"Regarding youre load bak next week …I know of someone who might neede a load but I don't actually know the guy and I don't know how much you wanna charge him. Let me know what you want me to do. If you want you can call him direct – his name is Harry 00447739091821".

In a further email of 14 November 2003 Mr Sanghera said:

"Regarding a load back Im sure Harry will need one as I emailed you earlier but you need to discuss prices with him".

The trip to Malaga took the Appellant two and a half days. The Appellant had a disagreement with the chap at the warehouse because there was no load to take back. The Appellant, however, discovered on the journey down that Mr Sanghera had been lying about the load back. In those circumstances the Appellant decided on the way home to buy a few "bibs and bobs", presents and gifts for the family and try to establish new customers. He purchased the spirits in different shops in Malaga, Madrid and Bilbao. He could not remember where the cigarettes were bought. The Appellant purchased the pallet of beer at Dunkirk just before departing across the Channel to Dover. He paid 646.80 Euros for the beer. The Appellant purchased a pallet because it was easier to load a pallet on the vehicle with a forklift rather than handball each crate. The Appellant was recovering from a hernia operation which made it difficult for him to lift heavy items.

During the journey the Appellant slept either in hotels or in his van. By the end of his trip the van was in a mess. The Appellant did not know where everything was and was unable to trace all the receipts for his purchases.

The Appellant told the Tribunal that he made the trip to learn about the route not for financial gain. It was his first piece of work and the trip was a practical learning curve. He did not plan the purchases on the return trip. It was "a spur of the moment thing". The Appellant did not consider that he bought excessive amounts of excise goods and he certainly had no intention of selling the goods. The Appellant has a large family including four brothers aged 34,35, 36 and 37. The family owns a very large house and about 25 to 30 members of the family meet on a monthly basis to take part in celebrations. On the journey home the Appellant heard about England winning the Rugby World Cup which would be celebrated back home. The alcohol was bought for the various celebrations that would take place shortly including winning the Rugby World Cup, Diwali and Christmas. The cigarettes were purchased for his family, everyone was a smoker, smoking about 20 cigarettes each daily. The Appellant had purchased two brands of cigarettes.

The Appellant was upset by the "grilling" given to him by the Officers after being stopped at Dover by the Officers. He was not ready for it because he had been travelling for one week. The Officers were telling him to stand, not to look in the car. The Appellant did not consider that the Officers were being reasonable. He stayed to be interviewed because he felt he had no choice. He gave his statement "roughly talking". He did not go into detail. The Appellant accepted before the Tribunal that he could not remember the brands of cigarettes and the makes of spirits he purchased during the interview.

The Appellant had not travelled before by motor vehicle to France except as a boy on a school trip to Calais. His only previous contact with Customs was returning on holiday from Spain by plane.

The Appellant considered that the Respondents were wrong to seize his motor vehicle. The lease hire company has threatened the Appellant with legal action to recover the total sum of £19,026.91 owing under the contract. The company was alleging that the Appellant had broken the contract for improper use of the vehicle and claiming the full charges under the four year lease. The only way that the Appellant can pay the debt was by selling his home. The Appellant had the vehicle for nine days and paid £1,400 in lease charges. According to the Appellant the vehicle has been returned to the lease hire company.

The Appellant in evidence before the Tribunal denied that he was bringing back the excise goods for a commercial purpose. He accepted that it was a big financial burden to lose the goods but it was not correct to say that he was concerned about the loss of profit because he was not selling them. He felt he could bring in as much excise goods as he liked provided it was for personal use.

Representations from Respondents' Counsel

Counsel accepted that the Appellant had crossed the Channel on a bona fide business trip but was frustrated when he was unable to return with a load and decided to fill the van with an excessive quantity of excise goods. Counsel argued that the Appellant's explanation of buying goods for the family with money they gave him to start the business was implausible. The Appellant had failed to produce receipts for the cigarette purchases and did not know the brands of the cigarettes bought, which suggested to Counsel that the Appellant had a commercial purpose for the excise goods. The Review Officer was right in not entertaining restoration of the motor van because it did not belong to the Appellant.

Jurisdiction of the Tribunal

The Respondents' powers regarding restoration of goods which have been forfeited or seized is set out under section 152(b) of the Customs and Excise Management Act 1979. Once the power is exercised whether in the form of a positive decision to restore on terms or a refusal to restore, the person affected has a right of appeal to the Tribunal. The powers of the Tribunal are limited in the terms set out in section 16(4) of Finance Act 1994 which provides that:

"confined to a power, where the Tribunal are satisfied that the Commissioners or other person making the decision could not reasonably have arrived at it, to do one or more of the following, that is to say –

a) to direct that the decision, so far as it remains in force, is to cease to have effect from such time as the Tribunal may direct;

b) to require the Commissioners to conduct, in accordance with the directions of the Tribunal, a further review of the original decision;

c) in the case of a decision which has already been acted on or taken effect and cannot be remedied by a further review, to declare that decision to have been unreasonable and to give directions to the Commissioners as to the steps to be taken for securing that repetitions of unreasonableness do not occur when comparable circumstances arise in future.

The precondition to the Tribunal's exercise of one or more of its three powers, namely, that the person making a decision could not reasonably have arrived at it falls within the guidance given by Lord Lane in the decision in Customs and Excise v JH Corbitt (Numismatists) Ltd [1980] STC 231 at page 239:

"…..if it were shown the Commissioners had acted in a way in which no reasonable panel of commissioners could have acted; if they had taken into account some irrelevant matter or had disregarded something to which they should have given weight".

The Tribunal is entitled to make its own findings on the primary facts which are to be taken into account by the Commissioners when exercising their powers regarding restoration of goods. The finding of facts includes blameworthiness, the intended use for the excise goods: private or commercial, the proportionality of the penalty imposed to the policy aims pursued having full regard to the individual circumstances of the case and exceptional hardship. The Tribunal, however, has no fact finding jurisdiction for the purpose of challenging the legality of the seizure and forfeiture of the goods. The Tribunal will then apply its findings of fact to determine whether the Commissioners acted reasonably in refusing restoration.

Respondents' Policy for Restoration of Excise Goods

The Review Officer did not recite in full the Respondents' policy on restoration of excise goods. For completeness the policy is set out below:

"It is this Department's general policy that seized excise goods are not restored. However, each case is examined on its merits to determine whether or not restoration may be exceptionally offered. In conducting this examination the presence of any one of the following factors will militate against restoration:

any evidence of previous smuggling or failure to comply with legal requirements;

any evidence that the person involved knew what they were doing was wrong;

any evidence that the person was paid to make the journey;

large quantities of goods which might damage legitimate trade;

any evidence that the goods were for a commercial purpose".

The Tribunal's Findings of Fact

The Respondents' policy for restoration of excise goods identified five factors, the presence of any one of which will militate against restoration. We make the following findings of fact in relation to the Appellant's importation against each of those factors.

Any evidence of previous smuggling or failure to comply with legal requirements

There was no evidence to support a finding of previous smuggling or failure to comply with legal requirements. The Appellant had only travelled to France before on school trips as a boy and had gone to Ibiza on holiday by plane

Any evidence that the person involved knew what they were doing was wrong

The Appellant has said throughout that the goods were purchased for his personal use and as gifts for his family. The Appellant was open with the Customs Officer when stopped about the quantity of excise goods purchased. The Respondents have suggested that the Appellant's response "you know what keep it I'm going" was an inappropriate response and indicative that he knew he was doing something wrong. We had the benefit of hearing from the Appellant in person and formed the view that his response typified his bewilderment and frustration about what was happening to him rather than an admission of guilty knowledge.

Any evidence that the person was paid to make the journey

The Appellant purchased the excise goods by cash and credit card. He had sufficient funds in his business bank account, of which £10,000 was contributed by his father and £2,500 was deposited by the Appellant. His father also paid for the ferry ticket and the fuel to deliver the goods to Malaga. The Respondents accepted that the Appellant's initial purpose in making the trip was not connected with the purchase of excise goods. We are satisfied that the payments made by the Appellant's father were to support the Appellant with his new business of international delivery service. Respondent's Counsel made the point that it seemed implausible to use his father's money for the purchase of excise goods as gifts for his family. The Appellant was insistent that he contributed the £2,500 to the bank account which would have covered the cost of the excise goods. Also he had every intention of repaying his father when the business got off the ground. We accept the Appellant's explanation.

Large quantities of goods which might damage legitimate trade

The Appellant brought into the UK 3,540 cigarettes, 617.10 litres of beer, 4.5 litres of wine and 37.5 litres of spirits which were above the guide levels in the 2002 Regulations except wine. The Review Officer did not rely on this ground for refusing restoration.

Any evidence that the goods were for a commercial purpose

This question needs to be considered in the context of the legislative framework. Council Directive (EEC) No. 92/12 lays down a number of rules on the holding, movement and monitoring of products subject to excise duty, in particular so as to ensure that chargeability of excise duties is identical in all the Member States. The Directive draws a distinction between, on the one hand, goods held for commercial purposes, in respect of which accompanying documents are required for transportation purposes, and, on the other hand, goods held for personal use. Under Article 8 excise duty for goods held for private use is payable in the Member State in which they are purchased. No document is required when they are transported to another Member State. For Article 8 to apply, however, a number of conditions must be satisfied. The goods on which excise duty is chargeable must have been acquired by private individuals for their own use and transported by them. Article 9.2 sets out criteria for establishing whether goods transported by private individuals are intended for commercial purposes.

The provisions of the Directive were originally implemented in the United Kingdom by The Excise Duties (Personal Reliefs) Order 1992 SI 1992 No.3155. The 1992 Order was replaced by the Excise Goods, Beer and Tobacco Products (Amendment) Regulations 2002 SI 2002 No. 2692. Regulation 12 gives guidance on whether the goods are held for own use or commercial purposes.

The relevant provisions of Regulation 12 are as follows (note they just relate to tobacco but the same wording is incorporated in the Regulations dealing with wine and beer):

1B(b) "own use" includes use as a personal gift,

(c) if the tobacco products in question are -

(i) transferred to another person for money or money's worth (including any reimbursement of expenses incurred in connection with obtaining them), or

(ii) the person holding them intends to make such a transfer,

those products are to be regarded as being held for a commercial purpose,

(d) if the products are not duty and tax paid in the member State at the time of acquisition, or the duty and tax that was paid will be or has been reimbursed, refunded or otherwise dispensed with, those products are to be regarded as being held for a commercial purpose,

(e) without prejudice to sub-paragraphs (c) and (d) above, in determining whether tobacco products are held or used for a commercial purpose by any person regard shall be taken of -

(i) that person's reasons for having possession or control of those products,

(ii) whether or not that person is a revenue trader (as defined in section 1(1) of the Customs and Excise Management Act 1979),

(iii) that person's conduct, including his intended use of those products or any refusal to disclose his intended use of those products,

(iv) the location of those products,

(v) the mode of transport used to convey those products,

(vi) any document or other information whatsoever relating to those products,

(vii) the nature of those products including the nature and condition of any package or container,

(viii) the quantity of those products, and in particular, whether the quantity exceeds any of the following quantities -

3,200 cigarettes,

400 cigarillos (cigars weighing no more than 3 grammes each),

200 cigars,

3 kilogrammes of any other tobacco products,

110 litres of beer

90 litres of wine

10 litres of spirits

20 litres of intermediate products

(ix) whether that person personally financed the purchase of those products,

(x) any other circumstance that appears to be relevant."

Applying the criteria set out in Regulation 12(1B)(viii) the Tribunal finds that

i. The purpose of the Appellant's journey was to deliver clothing in connection with his newly formed business. The Appellant had an expectation that he would be returning to the UK with a full load from a factory outlet in Malaga. The Review Officer questioned the competence of the Appellant as a businessman suggesting that he should have had a formal contract for the return load rather than relying on the e mail. The Review Officer also commented on the time the Appellant took to return to the UK which together with his response that "had the contract been fulfilled there would have had no reason to use the vehicle to full capacity on the return trip" suggested to her that the purchase of the excise goods was for a commercial purpose. We formed the view that the contents of the e mail enabled the Appellant to hold a realistic expectation of a return order. We drew no adverse inferences from the fact that he had no formal contract. The Appellant's reliance on the e mail was a reflection of his inexperience in business matters and his desire to start up his business. We consider that the haphazard nature of the return trip and the Appellant's method of purchasing of goods were indicative of spontaneous actions on the part of the Appellant rather than evidence of a settled intention to purchase the goods for a commercial purpose.

ii. The Appellant was not a revenue trader.

iii. The Appellant has maintained throughout that the goods were purchased for his own use and as gifts for his family. He did not refuse to disclose his intentions with respect to the goods.

iv. The Appellant made no attempt to conceal the excise goods.

v. The Appellant conveyed the goods in a motor vehicle.

vi. The Appellant produced the receipt for the beer to the Respondents but was unable to find the receipts for the cigarettes and the spirits.

vii. The Appellant purchased one brand of beer (Kronenbourg). He bought bottles of Bacardi and whisky and two brands of cigarettes, although he could not recall the brands of the spirits and cigarettes.

viii. The quantities of 3,540 cigarettes, 617.10 litres of beer, and 37.5 litres of spirits purchased exceeded the indicative quantities specified in the 2002 Regulations of 3,200 cigarettes, 90 litres of beer and 10 litres of spirits. The quantities purchased, however, were consistent with the intended use declared by the Appellant. His four brothers smoked about 20 cigarettes a day. His family were big drinkers with his extended family holding monthly gatherings. The timing of the purchases coincided with major celebrations such as Diwali and Christmas. We accepted the Appellant's explanation for purchasing the pallet of beer because it was easier to forklift the pallet onto the van rather than handle individual crates.

ix. The Appellant purchased the goods by cash and credit card. The bank statement produced indicated that he had the means to pay for the goods. The money provided by his father was to support him in his business rather than for the purchase of excise goods. There were contradictions in the Appellant's account. In interview and at the Tribunal the Appellant said the he purchased the goods, whereas in the letter accompanying the Notice of Appeal he did say that members of his family had telephoned him for goods and that they would reimburse him on his return. On balance we have decided to accept the Appellant's testimony at the Tribunal where he stated that he bought the goods himself and that members of his family did not contribute to the purchases.

x. The Appellant was not a regular traveller to the continent. This was his first cross Channel trip using a motor vehicle as an adult.

We consider that the evidence supports a finding that the goods were purchased for his family. We accept that there was a conflict in the evidence about whether the Appellant purchased the goods from his own resources or was expecting to be reimbursed at cost price for the goods from members of his family. On balance we are satisfied that he bought the goods from his own resources. The evidence relied upon by the Review Officer pointing to a wider commercial purpose for the goods purchased concentrated on the haphazard nature of the Appellant organisation of his affairs. We consider that this evidence was symptomatic of the Appellant's disorganisation and his spontaneous approach to life rather than a systematic attempt to import excise goods for a commercial purpose.

Was the decision not to restore proportionate to the aims pursued?

Article 1 of the First Protocol of the European Convention of Human Rights dealing with peaceful enjoyment of possessions was engaged when the Respondents deprived the Appellant of his excise goods and the motor van. The Respondents justified their interference with the Appellant's property because they are pursuing a legitimate aim of deterring those people who are intent on regularly smuggling tobacco and alcohol in the UK. The revenue evaded on smuggled excise goods escalated to a massive loss of revenue to the Government in 2000/01, estimated at £3.5 billion for tobacco smuggling and £850 million for alcohol smuggling.

The Respondents' policy for motor vehicles incorporated the principle of proportionality by relating the restoration to the degree of the Appellant's contravention of the 2002 Regulations. The Appellant's company, "Blue Logistics Ltd", leased the Mercedes Sprinter van registered number FM03 GFA under a four year agreement with Daimler Chrysler. The Appellant was insured for the use of the vehicle and the registered keeper of the vehicle. The Respondents' decision not to restore the van to the Appellant interfered with the Appellant's right of possession to the vehicle. The Respondents were, therefore, obliged to consider whether non-restoration was a proportionate response to the Appellant's contravention which they failed to do. In view of our finding that the Appellant purchased the excise goods for members of his family we consider that the non restoration of the Mercedes Sprinter van was a disproportionate response.

Did the Non-Restoration of the Vehicle cause the Appellant Exceptional Hardship?

The Review Officer contended that the Appellant should expect considerable inconvenience and perhaps a large expense of either replicating or replacing the transport arrangements. She concluded that the Appellant would not suffer exceptional hardship as result of the non-restoration of the motor van. Our analysis is somewhat different. The Appellant was engaged in the business of international delivery services. His vehicle was his business. Since the Review decision solicitors acting on behalf of the vehicle lease hire company has demanded from the Appellant the full amount of £19,000 due under the agreement. The Appellant stated that he would have to sell the family home to meet the claim. Further he cannot carry on his business without the motor vehicle. The loss of his business and family home would in our view constitute exceptional hardship.

Summary of our Findings of Fact

We find that

The Appellant had no previous history of smuggling or failure to comply with legal requirements.

There was no evidence that the Appellant knew he was doing anything wrong.

The Appellant paid for the excise goods from his own resources. The contributions from his father were to support the Appellant with his business and were not connected with the purchase of excise goods.

The Respondents did not rely on the fact that the quantities of excise goods purchased by the Appellant would damage legitimate trade.

The Appellant bought the cigarettes, beer, spirits and wine for his family. The members of his family did not reimburse him for the cost of the goods.

The non-restoration of the motor vehicle interfered with the Appellant's rights of possession in the vehicle and was disproportionate to our finding that the excise goods were purchased for the family.

The Appellant suffered exceptional hardship as a result of the non-restoration of the vehicle.

Was the Respondents' Review decision Reasonable?

The Review Officer did not take full advantage of the structures provided by the Respondents' restoration policies for excise goods and vehicles and the 2002 Regulations when finding the facts. The Respondents' restoration policy for excise goods was not cited in full in her consideration. The result of her approach was that her fact finding exercise was selective and certain obvious facts, such as the quantities of excise goods imported which may have strengthened the Respondents' case, were overlooked in her consideration. Thus, for example, the Tribunal did not know whether the Respondents considered the amount of excise goods brought in by the Appellant would damage legitimate trade. We were in doubt about what exactly the Review Officer had concluded about the purpose of the Appellant's importation. We were not sure whether she had concluded that it was a commercial importation for profit or an importation for distribution to family members who had contributed financially to the purchase. This finding is critical for determining whether non-restoration was a proportionate response.

Of greater concern was that the Review Officer misdirected herself on the law relating to restoration. In her consideration she stated that the Appellant had no standing in relation to restoration of the motor van because he did not legally own it. Technically the Review Officer's approach would exclude the vast majority of applicants for restoration because by the time their application is heard their ownership rights in the property have been forfeited under the provisions of the Customs and Excise Management Act 1979. Section 152 of the 1979 Act gives the power to Customs and Excise to restore any goods forfeited or seized. Section 152 does not limit the power of restoration to legal owners of the property. Section 14 (2) of the Finance Act 1994 defines the person who can apply for review of the Respondents' decision not to restore property, which essentially is any person against whom the decision has been made. Section 16(2) of the 1994 Act limits the appellate jurisdiction of the Tribunal to the person who required the review. In this Appeal Mr Singh was the person against whom the decision not to restore the motor vehicle was made. He was, therefore, entitled to a review of the decision not to restore to be determined on its merits, not for it to be summarily dismissed because he was not the legal owner of the vehicle

There may be situations where a person may have his application to restore rejected because he has no legal interest in the property, for example he may have stolen it. However, in this Appeal the Appellant's company had a legal right of possession to the motor vehicle under the lease hire agreement. The Appellant was, therefore, entitled to expect the Review Officer to carry out an analysis of whether the non-restoration of his legal right to possession in the vehicle was a proportionate response to his alleged contravention of the 2002 Regulations. The Officer performed no such analysis. She did not relate the value of the loss of his right to possession of the vehicle to the duty evaded by the importation. She did not weigh up whether the hardship caused by depriving the Appellant of his right to possession was justified by the scale of the alleged contravention.

The Respondents have stated that the vehicle would be restored to the lease hire company. The Review Officer did not state in her consideration whether this had been done. Also the Respondents did not advise the Tribunal about whether the lease hire company had made an application for restoration of the vehicle.

We are, therefore, satisfied that the Review Officer's decision of 11 February 2004 was unreasonably arrived at within the meaning of section 16(4) of the Finance Act 1994.

Our Decision

In view of our finding that the Respondents' decision of 11 February 2004 was unreasonably arrived at, we allow the Appeal. No order for cost is made because the Appellant submitted no application despite being invited to do so.

Orders

We make the following orders pursuant to our decision to allow the Appeal and in accordance with section 16(4) of the Finance Act 1994:

a. The decision not to restore to the Appellant the excise goods and the motor vehicle shall cease to have effect from the date of release of this decision.

b. The Commissioners shall conduct a further review of the decision not to restore the excise goods and motor vehicle and serve the same on both the Appellant and the Tribunal within 30 days of release of this Decision.

c. An Officer not previously involved with the case shall conduct the further review.

d. The further review shall be on the basis of the Tribunal's findings of fact as set out in paragraphs 27 to 40 of this decision and shall consider whether restoration should be made in the form of compensation and if so shall specify the amount of compensation and the basis of the calculation.

e. The Review Officer shall take account of any further material or representations made by the Appellant within 14 days from release of this decision. The representations shall be made to HM Customs and Excise, Review Team, Detection South Region, Crownhill Court, Tailyour Road, Crownhill, Plymouth, PL6 5 BZ.

f. The Appellant will have a further right of appeal to the Tribunal if dissatisfied with the outcome of the further review.

MICHAEL TILDESLEY

CHAIRMAN

Release Date: 16 August 2004

MAN/04/8026